Susan Collins, president of the Boston Federal Reserve Bank, delivered a speech at an event at the Gerald R. Ford School of Public Policy at the University of Michigan in Ann Arbor, emphasizing that despite the overall soundness of the economy and the expectation that inflation will return to the Federal Reserve's 2% target, a further interest rate cut is still necessary, but policymakers must exercise caution to avoid acting too quickly or too slowly.

She pointed out that although the final outcome remains uncertain, current policies are still restrictive, and the Federal Open Market Committee is prepared to address inflation and employment risks, with interest rates not following a preset path. At the same time, Collins stated that further slowdown in economic recruitment is undesirable, and there is still a possibility of interest rate cuts in December, but the specific decision needs to be based on subsequent data. Policymakers will submit their latest interest rate and economic forecasts at the meeting scheduled for December 17-18 next month.

In her speech, Collins mentioned that although the overall economic performance is good, inflation progress may be uneven, with strong demand potentially putting upward pressure on prices. At the same time, the labor market is healthy, but job growth is slowing and more concentrated in a few areas. She emphasized that policymakers need to remain cautious on the issue of rate cuts because of the uncertainty about how much borrowing costs can ultimately be reduced. She pointed out that the policy adjustments made so far allow the Federal Open Market Committee to take the time to comprehensively assess the impact of existing data on the outlook and the related risk balance.

Furthermore, Collins also mentioned that after Federal Reserve officials cut rates by 50 basis points in September, they reduced rates by another 25 basis points this month. Several policymakers are inclined to take a cautious approach to further rate adjustments. It is reported that she stated last week that the inflation rate is "strongly rebounding," approaching 2%, but inflation data may fluctuate month by month.

It is worth mentioning that before joining the Boston Fed, Collins worked at the University of Michigan for 15 years, including a decade as dean of the Ford School. This speech also reflects her profound understanding of the current economic situation and her cautious attitude towards policy making.

Similarly, Federal Reserve Board Member Cook recently stated that she is closely monitoring further signs of weakness in the US labor market, while observing whether inflation continues to fluctuate on the way to the central bank's 2% annual target. Cook expects that further rate cuts may be implemented in the future, but she emphasizes that decisions will not be made prematurely.

In her speech at the University of Virginia, Cook stated: "I still believe the direction of the policy interest rate path is downward, but the extent and timing of rate cuts will depend on the latest data, changing outlooks, and the balance of risks. I do not believe that policy is on a preset track; I am ready to respond to changes in the outlook at any time."

She added that if the pace of inflation easing stops, the Federal Reserve may pause rate cuts; and if there is greater weakness in the labor market, policies may need to be relaxed more quickly. In the case of a balance between the two, Cook expects interest rates to gradually decline to neutral levels, which do not stimulate or suppress economic activity.

Editor/Rocky